Pollution laws to hit Goa’s sponge iron industry

MUMBAI: For the sponge iron industry in India Goa was virgin territory that was relatively unexplored. The industry's hopes got quashed last month when the Goa State Pollution Control Board (GSPCB) put a ceiling on setting up sponge iron and scrap melting units in the state. Five units were already issued notices earlier this year by the Goa government, that wants to preserve the sylvan environment in the state.The sponge iron industry, say insiders, is partly to be blamed for the fiasco. "Producers, have in the past, used short cuts to set up units and pollution control measures were often not implemented. However, it doesn't mean that the new plants will do the same," said an executive from a consulting company supplying technology to the sponge iron plants.

The main reason for the short cuts are the added costs that comes with pollution-control measures. Costs of setting up a unit can go up by almost 25%. "This is a large sum for small and medium entrepreneurs. The cost of setting up a standard unit with a capacity of 100 tonne per day is Rs 15 crore," said an industry official.

But the manufacturers say regional politics is the reason for the ceiling. An official from one the companies asked to shut shop, said "the concern over pollution is acceptable, but we have agreed to get environmental clearances. We already had asked for permission to shut down and upgrade the unit even before the notice came. The government is hesitant to take any step that will anger the tourism lobby in the state."

"Today we have technology that ensures zero-pollution," added another. "We even have data to prove that the sponge iron units will generate more revenue for the state than its tourism sector," he said.

It remains to be seen if the reasoning finds acceptance in the state which is wary of taking any step that will damage its image as a tourist destination. "People there are emotional when it comes to tourism," said a sponge iron manufacturer.

Experts have questioned the feasibility of setting up sponge iron units in Goa because they need iron ore lumps. "Reserves found in Goa have a low iron content and only fines are produced by the mining industry there," said an industry analyst. The state, along with Karnataka, accounts for almost half of the country's iron ore reserves. Goa's mining industry exported almost 30m tonne of iron ore (of the total 90m tonne) to China last year.

But producers say even fines can be processed into lumps. "The major attraction of setting up units in Goa is the increasing demand for sponge iron by steel units in neighbouring states. It also helps that sponge iron prices have been increasing," said an industry observer.